Money is tight in the mining sector right now, say Stifel’s GMP analysts, who attended the Precious Metals Summit in Beaver Creek, Colorado, but investors are still willing to pay for attractive projects.
Speaking ahead of the summit, analysts Alex Terentiew and Stephen Soock wrote that despite struggling equity markets and increasingly frugal companies, there is still upside for investors. Specifically, the two referenced a CA$150 million equity financing, released literally Monday morning before the conference, which will fund construction of Marathon Gold’s Valentine Project.
“Even though the stock markets are in the red, they are far from over,” wrote the analysts. “In our view, investors are doing their homework, picking their favorites and preparing to get back in when the time is right. … Money is there to fund the right projects.”
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Impressive projects included those by Thor Explorations Ltd (TSX-V:THX, AIM:THX, OTC:THXPF) in Nigeria and Senegal.
The first gold was poured at Thor’s high grade (4 g/t) Segilola open pit mine in Nigeria last year and management estimates Sustainability Costs (AISC) to total 90-100 koz (thousand ounces) of $850-950/oz per year 2022. The Company transitioned from diesel to natural gas earlier this year, benefiting mine economics, along with better than planned gravity recovery.
Also in the Company’s pipeline is the Douta project in Senegal, which is located 30 kilometers from Endeavor Mining’s Sabodala gold mine and is scheduled for a feasibility study in early 2023.
Multi-million ounce option from First Mining Gold
First Mining Gold Corp, meanwhile, also impressed Stifel analysts by adding another “multi-million ounce option” with its acquisition of the 5 moz (million ounce) Duparquet project in Quebec’s Abitibi region.
Duparquet has been largely dormant for the past seven years and the ore is considered refractory, however extensive metallurgical work has been completed and the deposit remains open at depth and along strike, analysts said.
“High-grade core could improve economics, and First Mining’s consolidation of surface rights could open up new opportunities for surface values, we believe, that previous owners have not been able to realize,” analysts said.
Exploration success despite broader slowdown
In addition, Stifel noted that companies have slowed exploration activity this summer as they “sense no reward in the market for good drilling results.”
That sentiment didn’t stop HighGold Mining Inc (TSX-V:HIGH, OTCQX:HGGOF), which the report said had an excellent hit rate at the Ellis target at its Johnson Tract project in Alaska.
Closely spaced drilling around a 2021 discovery hole (578 g/t gold and 2,023 g/t silver over 6.4m) has revealed very high-grade configuration over a 100m x 100m area, with major step- outs to be drilled. HighGold has drilled 25 holes at Ellis with eight results released to date.
In addition, HighGold has begun fundamental work to de-risk the development of a future mine, including engineering work to extend the runway to accommodate heavy lift aircraft.
This would help advance a permit for a road to the tidal waters, Stifel noted, and streamline the early stages of consideration of a 900m underground exploration adit to provide drilling access for the down dip portion of JT Main and the FW copper zone.
Contact Andrew Kessel at [email protected]
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